Indian Shares Snap Three-day Winning Streak

4/4/2012 7:09 AM ET

Indian shares fell on Wednesday, snapping a three-day winning streak, as investors took some profits off the table ahead of market holidays on Thursday and Friday on account of Mahavir Jayanti and Good Friday, respectively.

Tepid global cues dampened investor mood after the U.S. Federal Reserve voiced concern about the pace of job growth, but appeared to refrain from announcing more monetary stimulus to prop up the world's largest economy. Domestic data showing signs of moderation in the services sector also weighed on investor sentiment to some extent.

Growth in the Indian services sector slipped to a five-month low in March as growth of new business activity slowed and future expectations dipped, a survey showed today. The HSBC Markit Business Activity index fell sharply to 52.3 in March from 56.5 in the previous month, with a reading above 50 indicating expansion in the sector.

The benchmark Sensex fell to an intra-day low of 17,437 before recouping some losses and ending down 111 points or 0.63 percent at 17,486, with 23 of its components retreating. Jindal Steel, Gail India, Bharti Airtel, Sterlite, ICICI Bank, Cipla, DLF, BHDFC, Mahindra & Mahindra and Hindustan Unilever led the declines in the Sensex pack, with losses ranging between 1 percent and 3 percent.

State-owned power equipment major BHEL bucked the downward trend to end 3.5 percent higher after it withdrew the initial papers filed with market regulator SEBI for its follow-on public offering. NTPC, ONGC, Maruti Suzuki and Hindalco rose between 0.2 percent and one percent, while ITC and Hero MotoCorp ended largely unchanged with a positive bias.

Coal India edged down 0.3 percent following a Presidential directive to the company to sign long-term fuel supply agreements with power producers, assuring 80 percent assured coal delivery. Power stocks ended mixed, with Reliance Power closing up 0.3 percent and Adani Power rallying 3 percent, while Tata Power slipped 0.4 percent.

Steelmakers like Tata Steel, SAIL and Jindal Steel ended subdued despite talk of steel price hike in both long and flat product segments.

Essar Oil plummeted 5 percent after the apex court dismissed a review petition filed by the company in a sales tax case. Suzlon Energy fell almost 2 percent as the wind turbine maker unveiled plans to sell a block of its windfarm assets for $40 million to repay loans.

Larsen & Toubro fell 0.9 percent as the engineering & construction giant said it bought U.K.-based Thalest for an undisclosed amount. Sun TV Network shed 0.7 percent even as it launched four additional channels on DISH Network in the United States. Federal Bank ended down 0.4 percent after hiking interest rates on both resident and NRE term deposits.

Maruti Suzuki rose 0.8 percent after Morgan Stanley raised its target price on the stock. Kingfisher climbed over 11 percent, extending the previous session's rally after its employees withdrew their proposed agitation. Shares of group company United Breweries Holdings soared 5.1 percent.

Cairn India rose half a percent following the announcement of its second oil discovery at Krishna-Godavari basin acreage in Andhra Pradesh. Educomp Solutions added 0.9 percent after its ICT division Edureach bagged an order worth Rs.209 crore from the government of Assam.

Elsewhere across Asia, Japan's Nikkei index fell 2.3 percent, Indonesia's Jakarta Composite index shed 1.9 percent and South Korea's Kospi average lost 1.5 percent, as hopes that the Fed would launch more asset-buying waned. Markets in China, Hong Kong and Taiwan were closed for holidays.

The minutes from Fed's March meeting revealed that only two of 10 voting committee members on the Fed committee saw the case for further monetary stimulus, if the economy weakened. This contrasts with the discussion in the minutes of the January meeting in which "a few members" believed that conditions could warrant additional securities purchases.

European shares tumbled in early trading, with benchmark indexes such as the German DAX, France's CAC 40 and the U.K.'s FTSE 100 losing over a percent each as concerns over structural problems in the peripheral EU countries and signs of little fresh stimulus to the U.S. economy heightened risk aversion.

Also, investors awaited an interest rate announcement by the European Central Bank later in the global day and Friday's jobs report in the U.S. for direction. Commodities fell almost across the board, adding to their overnight steep losses, while the dollar strengthened.